Gold Prices Rebound Despite Sharp Correction

Gold prices saw a significant drop of 3% last Friday, falling to $4,448.47 from its three-month high of $4,697.66 on Tuesday. However, despite this correction, analysts believe that the bullish setup remains intact.

The 50-day exponential moving average (EMA) has crossed above the 200-day EMA, a significant technical indicator that suggests a potential price increase. The current gold price is still within the broad support band of $4,370-$4,546 marked on the daily chart.

This setup is in line with Goldman Sachs' year-end forecast of $4,900, which is only 10.2% above the current price. UBS has even issued a higher target of $5,400 over the next 12 months, citing dollar diversification and central-bank buying as key drivers.

However, not all analysts are convinced that the correction is over. Marc Chandler of Bannockburn Global Forex believes that momentum was rolling over after gold peaked near $4,697, and sees potential support at $4,440 or even $4,360. The next test for gold prices will be Friday's US employment report, which could impact the dollar and interest rates.